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Instagram: How Facebook's Photo-Sharing App Makes Money
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Instagram, the photo-sharing app, created by Kevin Systrom and Mike Kreiger in 2010, is now one of the most popular apps among users. The company reported reaching half a billion monthly active users in June 2016.
In April of 2012, Facebook , the social media giant, acquired Instagram for about $1 billion in cash and stock. At the time, Instagram had only been around for less than two years, with initial funding of $500,000 from Baseline Ventures and Andreessen Horowitz. It was the largest acquisition that Facebook made before its IPO in May 2012 and many on the outside had questioned the purchase.
So How Does Instagram Makes Money?
Just like its parent company, Instagram makes all of its money from selling advertising. Instagram has three types of ads: image ads, video ads and carousel ads.
The ads are shared directly on users’ newsfeed and Stories. As the users scroll through their newsfeed, ads are distributed between actual users’ content. The users then have the option to follow the brand’s account or to click on an ad to learn more about its product or service.
Similar to newsfeed, ads are also distributed on Instagram’s Stories, a Snapchat (SNAP - Free Report) -like feature that lets users share temporary pictures or videos. Users will see the ads in one of the three ad types and have the option to skip or click on the ad.
Though Facebook doesn’t disclose Instagram’s financials, Fortune reported that Instagram said they now had 500,000 advertisers back in September 2016. Analysts from Credit Suisse said Instagram is estimated to have $5.3 billion in revenues.
In Facebook’s 2016 fourth quarter earnings report, the company reported 1.2 billion daily active users worldwide and $8.6 billion in advertising sales. Though it is noted that the 1.2 billion users don’t include sole users of Instagram, WhatsApp or Oculus, many users do use a combination of all three both, and Instagram accounts are often linked with a user’s Facebook account.
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Instagram: How Facebook's Photo-Sharing App Makes Money
Instagram, the photo-sharing app, created by Kevin Systrom and Mike Kreiger in 2010, is now one of the most popular apps among users. The company reported reaching half a billion monthly active users in June 2016.
In April of 2012, Facebook , the social media giant, acquired Instagram for about $1 billion in cash and stock. At the time, Instagram had only been around for less than two years, with initial funding of $500,000 from Baseline Ventures and Andreessen Horowitz. It was the largest acquisition that Facebook made before its IPO in May 2012 and many on the outside had questioned the purchase.
So How Does Instagram Makes Money?
Just like its parent company, Instagram makes all of its money from selling advertising. Instagram has three types of ads: image ads, video ads and carousel ads.
The ads are shared directly on users’ newsfeed and Stories. As the users scroll through their newsfeed, ads are distributed between actual users’ content. The users then have the option to follow the brand’s account or to click on an ad to learn more about its product or service.
Similar to newsfeed, ads are also distributed on Instagram’s Stories, a Snapchat (SNAP - Free Report) -like feature that lets users share temporary pictures or videos. Users will see the ads in one of the three ad types and have the option to skip or click on the ad.
Instagram’s advertisers include Nike Inc. (NKE - Free Report) , General Electric (GE - Free Report) and Google (GOOGL - Free Report) .
Bottom Line
Though Facebook doesn’t disclose Instagram’s financials, Fortune reported that Instagram said they now had 500,000 advertisers back in September 2016. Analysts from Credit Suisse said Instagram is estimated to have $5.3 billion in revenues.
In Facebook’s 2016 fourth quarter earnings report, the company reported 1.2 billion daily active users worldwide and $8.6 billion in advertising sales. Though it is noted that the 1.2 billion users don’t include sole users of Instagram, WhatsApp or Oculus, many users do use a combination of all three both, and Instagram accounts are often linked with a user’s Facebook account.
Long-Term Buys You Won't See in the News
The stocks you see in today's headlines may not be in the news tomorrow or next week. If you're looking for profitable long-term investments, you may be interested to see what Zacks Research is recommending to our private members. These moves have double and triple-digit profit potential. Starting now, you can look inside our stocks under $10, home run and value stock portfolios, plus more. Want a peek at this exclusive information? Click here>>